EVERYTHING You've Been Told About MONEY Is WRONG (How To Become Rich)| Ramit Sethi & Lewis Howes

and i always talk about how i got out of debt is with this book i i read it eight nine years ago and i had college debt i had some credit cards i was still kind of like figuring out what do i do with my money and transferring it over and stuff like that and i read this six week plan got out of debt now i had them cash to get out of debt as well but i also just got structured with my life and my finances and something crazy happens when you get organized with your finances and your money it's like the stress starts to go away or there's new type of stress which is like learning how to make more and learning how to manage it better once you have more but the stress went away from feeling like i don't have the control in my life in this area because they don't teach you this in school no they don't and thank you for sharing that because you know i sit here and i write this book and i write my emails to my email list and my social posts but it never gets old hearing a real person in front of me telling telling me how they use the book to change their life game changer math yeah i appreciate that because you know a lot of this money is not just money like it's great that you can have 20 000 in your bank account or many of my readers they use this came out in 09 they did exactly what the book said and now they have hundreds and hundreds of thousands of dollars which is amazing but i think the more meaningful part of it is they start to realize wow i can use money as a tool to create a rich life money doesn't have to be this thing that's bad it doesn't have to be this thing that everyone tells me what i can't do no lattes no jeans no nothing i can actually use it and if i want to fly business class i can if i want to buy something really nice for my parents i can and you start to almost open up your life and realize oh money's not holding me back it's actually amplifying what i really want to do i want to talk about uh two different things today one for those who are earning a lot of money what should what should they be doing with their money because there's actually a new problem once you earn a lot of money if it's just sitting in a bank that's actually a bad thing i think totally and nobody talks about it yeah and no one really talks about it so there's a lot of high earners who are listening so what are some of the things and listen there's a lot of things you can invest in there's real estate there's stocks there's starting businesses you can invest in other people's lewis house conference there you go yeah summon up greatness you can invest in a lot of things and then so i want to talk about that what do the high earners do with their money how can they manage it at a high level how can they save taxes how can they do all these other things to really earn more and save more and then also for those in the i guess 100 000 and below range a year what can they really be doing so they don't feel so stressed and overwhelmed about their money because they're probably a little bit in debt using too many credit cards maybe they're buying too many things that they shouldn't be buying at that stage and they're behind in their finances or they feel overwhelmed yeah so i think i want to start with the high earners first okay because you've been good at teaching this to kind of like the 60 to 150 000 a year earner this is kind of like i think that book is kind of in that range when you say maybe up to 200 000 i think so but then what happened was the people who followed the advice started making more they're balling they have hundreds of thou they're like what do i do with all this money i don't know what to do and that's the challenge it's it is a challenge because uh you can't really talk about it online no you go on to reddit and everyone's like oh i you know i reworm my oatmeal nine times and i can get a lot out of it it's like i don't want to take advice from you oatmeal warmers right and then uh if you talk about it publicly people are kind of like dude boo hoo what a problem what a jerk and actually you know look if you have been successful if you followed a program whether it's my program or anyone's program you've invested you've saved you now have new challenges and your biggest question is what's next like i sort of won i won that game of personal finance what's next i'm not in debt i'm not in debt so 99 of advice doesn't apply to me and people telling me you know i should uh i should cut my pieces of bread in three to save no that doesn't apply to me because i have earned and saved a lot so then then you start to say what's next am i missing something and finally and what i think is actually a highly advanced question is what do i do with this money not and this is a key thing i want everybody to pay attention to everyone teaches you how to save money but almost no one teaches you how to spend it so what do high earners do with their money why do some people spend money on business class tickets i used to think it was stupid ha ha we're all getting to the same place anyway and yet as you earn more you start to change your calculus of spending and hopefully we can talk about some of that you know what's interesting is isis i used to sit in the back middle seat coach southwest or like american whatever the cheapest flight is what i would look for and now i look for only first class or business class which is a business class and i look for can i get it for free can i get it with points nice i don't care if i could have bought a laptop with that money that's why i used to think like it's a thousand dollar for a flight i can buy a laptop with that i can buy a new iphone now it's more for me about like do i feel good am i recovered is am i gonna feel good when i get home so i can work harder and earn more yeah that's the way i think i love that and i want to unpack a couple of things you just said in that example first off when when anyone says you know i bought a business class ticket notice the almost instinctive reaction it's like ugh what a show-off and all these other things that come along with it and i want to challenge people i have this principle i call the d2c principle and it instead of uh being derisive and saying oh so stupid that's ridiculous i would never do that i actually want to encourage everyone to be see curious why would a guy like lewis intentionally spend money on a business class ticket then he he earns good money he has a lot of options he must know something that i don't and i want to understand why so from d to c and if you start to take that perspective especially on high earners and how they spend their money all of a sudden you stop saying that's ridiculous or if i had a million dollars i would never do that instead you say why did that person spend on it and i want to know maybe i don't agree maybe you know you become a multi-millionaire and you don't want to spend on business class you just don't care but it's it's interesting that you do it and i'd like to know more yeah i want to share another principle we have which is this concept of money dials and your money dial is the thing that you love to spend money on it's the thing that gives you joy and it's the thing you you could spend endless amounts of time optimizing and feel good about it and feel good about it and money if you think about 10 dials in front of you and each of them represents a different area of life that people spend on it turns out that each of us has one money dial that we love spending on your money dial i would be willing to bet is relationships oh yeah okay so relate so i have a friend nick ray nick gray loves hosting people at his house he every day he's trying a different party he's testing stuff he invites people over he does all kinds of crazy stuff he loves relationships that's his money dial and a money dial the reason i say it's a dial is you you start off you know maybe you have a couple people out to dinner and you as you start to get more money and more success you turn that dial until you are totally dialed in you have the perfect appetizer you have the perfect icebreakers you have maybe friends who have jets you're really turning that out there's other money dials the most common one is frugality most people actually focus on cost above all else and you can tell because when they buy something what's the first thing they say look at the price they look at the price and they tell everyone else i got this for sixty percent off uh okay so that's that's right about how discounted they got it part of their identity whereas for you dude i see your photos i see your conference your identity is about relationships now there's a few others there's wellness which is more and more common and you'll see people they have the perfect diet they have a chef they and i'm talking when they really dial it in this is the point of the full-time trainer yeah this is the point of an advanced personal finance which is you don't have to have a trainer when you start off right you can but you went and you searched for five hours you found the perfect program but as you have more money you start to say i want better results i want faster results and i have money i'm going to throw it at the problem mine my money dial is convenience so i love convenience me too and i wake up everything's delivered to you everything's delivered i have a chef when i leave to travel i have this thing called travel protocol that gets activated with my assistant and my plants get watered my email gets handled differently i mean it's like i've been thinking about this for the last 15 years i'm a psycho but that's my money dial and i love it like so so you'll pay a premium for that money dial exactly but i could not care less about certain other money dials yeah other common ones that a lot of people watching probably have or listening is travel so at a basic level people say i like to travel but imagine you've truly truly become more advanced and you've become more successful and you want to throw a lot of money at the problem because you value it suddenly maybe you're going three months a year maybe you are leading excursions i mean there's you can just expand your mind as to what you could possibly do beyond the typical eight days of vacation a year so i share this with everyone because i like to challenge people to do something take a look at your spending from the last two to three months and ask yourself what is my money dial once you know your money dial then it enables you to do two really cool things one is you can cut back on stuff you don't care about okay so if you just don't care about wellness or if you just don't care about travel that's okay you can cut the spend to that but i think the cooler thing is it allows you to take that money and now spend extravagantly on the thing you love which is your money dial so if if you're louis suddenly you don't mind throwing a lavish dinner for your friends with a performer and all kinds of crazy stuff because that's your money down yeah no need to apologize for it so for everyone especially the advanced folks who have money you you got to think now you're at a different level you're not just trying to cut your debt you're not just trying to cut back you actually can spend on the things you love and that to me is really exciting so figure out your money dial and spend more intentionally on those things as opposed to spending a lot on everything exactly what i do with my financial system is i set a target each year this is how much money i'm going to save and invest and those numbers are aggressive there's that's a lot of you're going hard yeah like every 10 30 yeah so anywhere between those ranges and we have folks who what you earn correct yeah and and then remember whenever i make any unexpected income let's say i did a speaking gig or something yeah i might get myself some i might go out to dinner but the rest i'm just putting straight in investments wow okay so that money grows aggressively and i also want to remind everybody especially the entrepreneurs watching i know you have a lot of entrepreneurs you wouldn't believe how many entrepreneur friends i know who have a good business and they don't invest at all and that's a huge mistake what should we be investing in if you have a good business simple low-cost target date funds is a great way to go entrepreneurs yeah index funds yeah they get a little too smart for their own good they say i could just put that money in my business and i always say look i'm glad you have a business that's throwing off tons of cash that's awesome most businesses don't last 80 years so be smart give yourself a small plan b put 5k a month 10k a month whatever is appropriate for your level of success and hey maybe your business does really well that's awesome but maybe one day something goes wrong always want to be prepared you never want to have your back against the wall so i just want to encourage everybody whether you're making 250k or 2.5 million for the high earners here don't get too smart for your own good keep investing and saving what are the three or four main things you invest in with that 10 to 30 a year and does it change year to year yeah i'll kind of walk you through for the high earners and then we can talk about people 100k and less so once you have a certain amount of capital you do have a few opportunities that you probably didn't have before um everybody has this idea that you know the rich have all these crazy tax breaks and captive insurance and this and that and i've looked into all that stuff right right right i know building insurance companies and all these other things right yeah here's the truth the truth is some stuff is a little sketchy but yeah definitely and i'll say my core values are that when it comes to things like taxes i love your principle on this i'm very conservative i'm like dude only in this country could i have been this successful i love this mindset i'm happy to pay my taxes it means that i had the opportunity to create something great and if i pay an extra five thousand or thirty thousand it doesn't change my life at all and i want to be able to give back to the society that enabled me to do what i do that's a powerful mindset and it and it gets you away from you still want to optimize tax breaks that are out there but it gets you away from trying to constantly look for some of the shortcuts or like schemes or something it's like yes i've always found that the people especially entrepreneurs who talk about tax breaks all the time are typically the most unsuccessful ones two reasons one why are you talking about tax breaks instead of growing your business yeah and two it's a very scarcity driven mindset oh i only have this much that i have to protect when really you can just grow the pie and your taxes are simply a proportion more just make more now yes you do want to optimize and take advantage of all legal tax breaks so as you earn more you do have more opportunities you have not only your 401k you have all kinds of advanced ira options you have hsas you have a variety of things but at a certain point if you're making enough you're going to max all of those out okay what do you do when you max it all out so then the next step is to simply create a taxable account it's just a typical non-retirement account just that vanguard or where i use vanguard whatever you want and you just continue to invest so that's one and that's going to keep making you money over the long term it's just you're not going to get those tax breaks from a 401k and ira et cetera the other thing is as you accumulate more and more assets you're going to start to notice a lot of different people are going to come with opportunities dude i get text messages from these crazies they're like hey i'm opening up a bar in brooklyn i'm like i don't want your stupid bar i'm not investing in that i could burn my cash easier but you're going to want as you start to accumulate a lot you're going to want to do have a little fun with your money when it comes to investing so some people want to do crypto i think a lot of these people are complete nut jobs great okay look you could put a little bit in there just to like have fun but i was like thank goodness i didn't put more in there because everyone's losing their money exactly and they you know they're all okay i don't want to get into crypto because i'm going to get a lot of angry emails hey if you want to email me about your angry crypto opinions just send it to trash i will teach you to be rich don't send it to me but you know what i like what you said you took a little bit you had some fun yeah had some fun five to ten percent once you've got all your other stuff automated you've got your index funds lockdown hsa your different accounts um i don't have any problem i think you should take five to ten percent and you should have some fun with it for me i did angel investing and i basically learned that i suck my injury investing is not good i haven't made any money yeah my deal flow sucks my choices were okay some hit most didn't i basically just wrote that money off but it was fun and it allowed me to have an outlet and you learned i learned to meet people and yeah yeah so if you want to do crypto if you want to invest in somebody's bar you want to do angel investing if you're qualified etc be my guest but don't jump to that first get all your stuff automated and at a certain point the compounding is so insane you will start to actually earn more from your investments than you will from your income even if you're making 500k a year from the index funds you're talking about if you're investing in that what if the market's going down or up should you even worry about that let's say you put a half a million in yeah it went up 100 000 over a couple years but then it went back to the original investment should you be like oh my gosh i need to take this out do not do that i'll give you a really just put two years of my money into this and it's still the same amount she just left in the bank no you shouldn't have left it in the bank all right so this happened to me just uh about two weeks ago so the market went down and uh i hardly ever log i log in about once a month tonight i see like yeah and really you should not be checking your investments every 10 years once a month is good and like don't you're not a day trader okay so so i happened to log in and i saw that in the 11 days of that month in one of my accounts i had lost 75 000. okay so for everybody listening yeah how would you react if you lost 75 000 in 11 days most people would be freaked out they'd be freaked out they would take the money out yeah which is exactly the opposite of what you should do that so everyone says this common thing and they just roll their eyes oh buy low sell high but in reality they actually buy high and sell low do you know what i did i did nothing i logged in i felt no emotion it wasn't like my life is over it was like watching someone offer me concrete to eat like i felt nothing i'm like that's fine whatever i just closed the window the key there is every month my system is automatically investing it's called dollar cost averaging it's just automatically investing and you should set the same thing up too you shouldn't be paying attention manually you shouldn't be sending a check it just works automatically and so i knew this month the market is down and if you think about any other thing you buy if the price of toothpaste goes down you're happy if the price of milk goes down you're happy the only time we get weird is when the price of the market goes down and then we're like oh let me pull all my money out bad move the price went down if you're young and you have a long time before you need the money you're getting the market editing get excited you should get excited so i just said great it went down fine doesn't bother me and i just closed the window and a few days later my system will just purchase it again so it's up it's down it doesn't matter in the short term but over the long term we know that the market tends to return about seven to eight percent over time but but it can go up it can go down and so you do not want to be paying attention in the short term let's say you've got a half a million to a million dollars extra cash okay laying around you've maxed out all your iras you've got five to ten grand a month going to your index funds you've got you've dabbled in the uh the the smaller investments and startups and you've kind of you've done it all yeah you've got a little bit of crypto you've tried everything what you do with that extra million dollars a year okay great question first off um this is like somebody saying to a fitness instructor you know i've done everything what should i do next and that you know what that fitness instructor is going to say they're going to say when you say everything what do you really mean like show me are you doing foam rolling are you doing this yeah are you all balanced for the person who's doing this i'm going to give you your answer but i'm going to first say are you sure have you planned out so you know that 10 years from now you're going to buy a house do you have a 20 down payment set aside i do and i have no plans to buy a house anytime soon but i have 20 set aside for a house that moment yeah yeah for when i so i already plan for what i know is coming even though i have no interest in it today what about the first year of your kid's life do you have that set aside what about xyz are you taking care of your parents when they get older one thing that that i really love to do is um talk about relationships so i love to invite my family once a year for a big big vacation where we can all stay in a house and there's a you know like a chef and all this stuff and we can all be there and the kids can be playing is that something that's important to you or cool right so plan for that now if you've done all that stuff you've got your six-month emergency fund you've got your investments automated on autopilot and you still have money left over you're in an awesome position and now you can do a couple of things one if you want to keep growing that money you can simply invest it in a non-retirement taxable account and that money will grow like crazy if you're putting in 10 20k a month that money will turn into massive amounts and you can if you guys don't believe me just go uh search for compound interest calculator bank rate has a really good one and plug in 20k a month for 10 years and that's it just stop and watch what happens what is that seven or eight percent yeah at seven percent returns and watch what happens it is it becomes like an a tsunami you cannot stop it so that's one the other thing is if you want to invest in a little bit of fun stuff if you're like hey i want to take 10 of this and invest in like this crazy investment my buddy's starting a thing go ahead just be prepared to write it off maybe it works maybe not and then from there you should also remember a third thing and nobody really talks about this maybe it's time to increase your quality of life maybe instead of uh staying in the middle back seat right it's time to upgrade to the exit row right or business class business class or maybe it's time to eat at a different restaurant maybe it's time to really think about your money dial and say hey i always claim that wellness is important and yet i'm still eating like the same old thing i used to eat 10 years ago maybe it's time to upgrade what i eat and and where i work out and all that kind of stuff my my gear you can do that you've made it you already won the basic game so now you get to benefit from it what about real estate there's a lot of people you're there i hear people that are all in on real estate investment or they're kind of like all in on the market uh yeah i think that real estate so a lot of people gonna hate me after i say this i know you guys have all been told since you were like two years old real estate's the best investment ever and it turns out that's not really true a couple of things that might surprise you buying one home if you're buying a house and living in it if you're buying multiple units or buying multiple homes and that's your business yeah it might be a better correct let me make the distinction so most people in america are told that the american life the american dream is graduate from college get married buy a house white picket fence 2.5 kids and you made it and i think we all just have to look at people who are a little bit older than us to realize that might not be our american dream we might want to travel more we might want to work remotely i mean here we are in the middle of a weekday yeah chit chatting and sharing it with millions of people this is our dream so i want to challenge people to really question what you've been taught that's number one number two most people who buy a house and live in it think that it is the best investment but most people have never read my piggy bank yeah they think that they don't understand that when you spend money on a house you've incurred tons of phantom costs you have taxes you have maintenance you have all kinds of things that you don't count and if you actually factor all those numbers in real estate often in fact many times is not a great investment at all it's a place to live and you have these phrases like you're throwing money away on rent it's not true uh your landlord's making a profit otherwise they wouldn't do it that's not true your landlord can't charge you whatever they want they can only charge you with the market market yeah so if you search my name and real estate you'll see all the numbers played out now on the other hand if you are a real estate investor and you're disciplined that's a different story and that can be effective but mom and pop who who are thinking that they bought their house in 1970 for 200 000 and now it's worth 600 000 they think they made 400 000 actually not if they had taken that money and put it in the market they would probably have much much more really yeah wow and less headache way less headache well depending if they looked at their investment every week maybe they'd be more stressed out the the level it's going up and down yeah yeah so and listen if you i will buy a house one day okay so i don't want anyone to think that i'm telling you never to buy a house yeah if you want to rent for the rest of your life you absolutely can many people in new york san francisco and other high costal living cities no there's no shame in that i rent by choice i could buy a place tomorrow cash and i choose to rent why do you choose to rent after you've been here for 10 years and you've been renting the whole time yeah on purpose and how much is that do you think over over half a million dollars oh yeah it's a lot of money well over i rent a nice place yeah um why do i do it because could have used that money in something else you could have put it in i did i put it in the market and i made more and because you didn't put it into a home correct where it was a lot more money up front it was more money up front i used that money instead i put in the market but there's also other reasons too i couldn't get for the amount i'm paying where i live if i were to buy a place in the same building or so much it would be four times more expensive so that's the first second is maintenance i'm gonna give you an example uh i woke up one day and the doorman was knocking on my doors like 8 30 in the morning on a saturday he's like sir sir do you mind if we come in and take a look at something i said okay and we go into the living room and there's a pool of water it had dripped down three levels so i was like oh my god they're like sir go back to sleep we'll take care of it that day they came they repaired the floors not just of mine the ceilings for the next two levels down that's probably likely to have costed them let's just say 50k maybe 100k because it's manhattan and it's a weekend service who knows that's not my fault you didn't pay for it no and and i and i said great that's their problem i'm going back to sleep man i got another hour of sleep here so i want everyone you don't have to believe me you don't have to believe what someone else does all you need to do is run the numbers that is my only suggestion to you go to a buy versus rent calculator make sure you plug in all the fees not just the taxes the realtor fee uh if you get a bigger place you're probably going to get more furniture for it the hoas or the yeah the lawn maintenance or trash service or whatever it is the key thing i think whether it's a house or investments my point to you guys is take your money seriously once you take your money seriously and you put some time in it whether it's this book or wherever you want to get your information you're going to be better off for it you don't want to delegate this to somebody else i want you to understand it and once you understand it and you automate it you make a few good choices in life you never have to worry about lattes or appetizers again how did you make the emotional shift when you're when you started renting an expensive apartment and you're like man if i added all this up after a year that's close to a down payment on a nice house in the midwest or maybe they can buy a whole house in the midwest you know what i mean yeah how do you emotionally rationalize that where you're not frustrated like oh gosh i just spent 10 years yeah you're throwing this money away because sometimes i feel that way sometimes like man i just spent a lot of money these last few years well let me ask you this um but i like the freedom and the flexibility of not having to incur all those other yeah would you like to eat you like strawberries no okay what do you like to eat some good steak and veggies okay steak once you when you buy a steak and you eat it do you feel like you just threw your money away on that steak no i enjoyed it but it's where is it i don't see it where's my investment right in fact isn't it coming out in the toilet in a couple hours it is yeah so what are we talking about here you get value out of a stake just like you get value out of renting now if you want to incidentally build equity that's great but remember you can also lose equity right now in manhattan do you know rents are down yes and so are prices of houses if you want to buy they're going down every month a lot of people like oh my god it's so expensive sometimes but sometimes it goes down five percent ten percent some of these neighborhoods are down fifteen percent away yeah so a lot of people don't realize in fact i did a survey of my readers i said do you think it's possible for real estate to decrease over half of people said no they had never even thought about it so i wanted 2008 2009. memories are short you would think they would remember but they don't i heard people do they had three houses they bought it they were destroyed financially they had their credit was ruined they had to give up these houses and their identity as an investor and three years later they're like i think i want to buy another couple houses wow it just goes to show i'm not saying they're stupid it's not that at all because a lot of people have gone through this it's the idea that the propaganda to buy a house or to follow a prescribed set of rules for the american dream is so powerful that even losing your own houses doesn't change people's perspective so how do you teach people to overcome the emotional rationalization of blowing their money on rent okay it's funny besides that story you just told which yeah helps me i'll tell you what i i want to acknowledge that it's real because it's a fear that people live with yeah and i'll give you an example like i call it the handshake effect and it's when people would come over uh to my apartment and for the first time and they would say wow this is an amazing view and then they always say the same thing in new york do you own this place and we're like shaking hands right it's like we just met just how much japan yeah how much you pay it's classic new york and i say no i rent and it's that moment where if i had said i bought they would be like this wow pretty impressive really cool yeah and you kind of get this this prize it's pride yeah and then i and then when i don't say that they get really confused because this is the i will teach to be rich guy but also he rents and i thought renting is for people who can't afford it but you know they don't understand and they give me this look and i realized that so many of us are looking for somebody to approve of us while we are shaking their hands someone we don't even know wow and so instead of getting your approval from somebody you just met 10 minutes ago or from your parents who probably are not the most sophisticated investors if you're watching this show you know you talk about greatness and being great means choosing your own path sometimes you might choose to buy i have no problem with that if you ran the numbers and you consciously decide sometimes it means you don't but if you want to live the life of greatness you need to be comfortable making different choices than what other people expect zing i like it man what do you have like a spreadsheet i'm just curious about how the way you think about your money you have a spreadsheet or some type of system where you're kind of have all these things logically mapped out where you know exactly where all your money's going and where you want to put it in five or ten years yeah in fact it's even more it's it's like scientific it's like yeah it's like minority report like i wake up and i just go yeah yeah no this is what i did so my money dial is convenience okay so as i became more advanced i realized it was time to put on a new lens and i think this is really important for people many people when they're starting out they think that uh growth is linear that basically you know i'm dribbling the ball i'm going to use the sports analogy and i'm on thin ice because i don't know anything about sports but you know i dribble 10 times a minute and as i get faster i'm going to dribble 20 times a minute okay this is a horrible analogy but just go with me at a certain point you're not just counting the number of dribbles you're actually counting ball handling you're you know you're counting whatever else you're doing with money it's the same you're not just creating a more sophisticated spreadsheet as you grow you're actually changing the way you think about money so i'll tell you what's changing you're reinventing you're not even using a spreadsheet so i'll tell you what i did i started off doing everything myself and that's what's in this book it shows you exactly how to go from i don't even know where my money's going or i have five thousand bucks sitting in my savings account two everything is running automatically and i spend less than 60 minutes a month on investing that's in the book but what happens when you get to the next level i'll tell you what i did i realized that it wasn't a good use of my time to be manually tracking anything even for 60 minutes a month because things had become complex i had multiple investments i have a business different accounts everything yeah all that so i found what what i call a personal cfo and what i did was i worked with them and i said here is exactly what i invest in here are my core values here's how i want you to deliver me information once a month so they created a basically a dossier they hand to me every month they send it and it's in the format that i want why because i'm the boss and they're they're working for me so it shows me a couple of core things what's my net worth what were any spending areas that i need to be aware of i typically have two spending areas that i track that that are more variable like sometimes i'll go out and buy more clothes that's a variable area for me i said look i love cashmere what am i going to do okay and then another one i think is eating out or travel aside from that all my expenses are very stable like i spend the same amount on stuff i've had the same apartment for 10 years like i'm not going crazy i'd rather save my money and invested and spend a little on the stuff i love we talk for 15 minutes each month and if anything needs to be changed they handle it so for a lot of people the next step is not necessarily just doing what you're doing but better it's actually a whole different way of looking at the problem where does someone find a personal what is it a personal cfo cfo for a lot of people the basic thing you can do to start with is to get a bookkeeper and you know we have this advanced personal finance course and we talk about how to find them a bookkeeper is a good thing to start with if you've got a business or if you've got you know a few hundred thousand dollars a year coming in and you've just got a number of accounts and maybe you have kids and stuff like that okay they can help you organize things as you get more sophisticated a personal cfo which can be part-time or if you're really sophisticated it can be full-time they can help you do more sophisticated things and they pair they work directly with your accountant and your bookkeeper and stuff you got it okay interesting yeah just go on craigslist and look see yeah you can do that and the the best place you do it is honestly you ask your friends your friends who have uh sophisticated net worths right ask them what they're doing ask them before we get into the the strategy for those who are making 150 000 a year and less on how they can really optimize everything i'm curious who are the high earners that you talk to for advice privately behind the scenes in the special secret rooms on the private jets who are those mega earners that you learn from i have a ceo group a ceo council that i belong to and we're really candid with each other about where we spend our money some of them are married some of them are divorced how does that play in relationships all kinds of stuff so that's one uh it's like it's like a new york group or is it all over the world yeah it's distributed we're all over the place talk online you meet in person both we meet in person uh twice a year and we talk on the phone about once every month and a half and i think that's important uh for everyone listening and watching which is have a group of folks that are ambitious and that want to succeed what's interesting is these guys aren't in my field at all i actually prefer that we're not talking about you know online stuff that's not the point we're talking about culture we're talking about life we're talking about relationships i think that's great i also have a lot of entrepreneurial friends uh who will share stuff just off the cuff we're hanging out and then finally you know my audience like a million readers a month and they're emailing me the craziest stories really they're telling me everything people are they crave talking about what's going on with money because no one else will wow and so i hear the best stories from my readers and that's what i get to kind of bring to everyone else why is it hard for us to talk about money why is it scary why don't we talk about it enough with our friends our family why is that there's one great study showing people would rather talk about their sex lives than their amount of credit card debt i love that i think that's totally true it's true 100 and think about what money means uh it means that you were successful in this culture and i am here you know no people know me as the i will teach you to be rich guy and i have always said money is an important but small part of living a rich life just because you make more or less doesn't mean we're better friends not at all has nothing to do with that uh but it is important for people to be in control of their money whether they're making fifteen dollars an hour or fifteen thousand dollars an hour and there are people i know who make that so that just simply shows are you in control of your life at whatever level you are it's embarrassing for people they're never taught this and then suddenly they graduate and they're supposed to know what tax withholding is and what a 529 and 401k and all this crazy stuff is nobody taught it to him so my goal here the reason i'm talking about this is for people to feel more confident about their money for them to take control and for them to stop being afraid and listening to random people giving them advice because i feel like it's hard when you're making 150 000 or less it's hard to talk about it and feel comfortable talking about it with your peers who are in the same category because everyone kind of feels embarrassed i know i felt that way for sure and if you stay in that space it's gonna be hard to get past it yeah so what's the conversation starter that's someone who's making 150k or less or very little what's the conversation starter they can have with a peer or a family member or a parent or a friend or a co-worker that's not going to throw someone off but that's going to activate the conversation about money okay having the conversation if you most people don't want to most people don't want to and that's okay if you simply want to improve your own money do that and you'll become a role model to other people and i think that's probably the most effective way but if you do want to have a conversation you know what i would do honestly not to plug my own thing get my book get somebody else's book it doesn't matter get a book and say hey i i realize i need to learn about money read any book about money any book yeah okay and does anybody here want to join me and let's do a little booklet so suddenly it's not it's not you and me talking about our money which really reflects our value in this society okay i use value in quotes it's let's talk about this book which is a third party in this dynamic and we can say i agree with this guy i disagree i i really like let's try this let's try this and like let's see so suddenly it becomes an experiment as opposed to your worth x or my value is y and that's really something you can work on together i like that yeah bring something else into it to the mix okay let's talk about the 150 000 a year and under people they've been you know working hard jobs they've been trying to save their money but it just seems like they haven't been able to get past whatever it is 50 grand a year 100 grand a year 150k they've been kind of stuck or they've crossed 100 grand a year and more problems have come to them because they're making more and spending more and they feel more broke than ever because they have no clue what they're doing with their finances still it's the end of the year they're about to start a new year soon and they feel overwhelmed or just clueless still about and educated about their money and what the what their options are for just being having peace of mind structure organization and knowing that they don't distress about it and they can go earn more and it's gonna pay off for them what's a few simple things that they should be doing right now to have a checklist to do before the end of the year to then crush for a whole 12 months moving forward all right i'm going to give you something called the ladder of personal finance which tells you where your money should go okay this is just step by step put your money here and if you want to know all the details about it you can check out the system so it's in the book too it's in great detail in the book got it all right so if you've got some money lying around what should you do with it first of all if you've got a 401k match at work you should max that out that's free money take advantage of it and if you're not sure what that means go to your hr person and say does this company match any 401k contributions if they say yes do what i said uh next if you've got debt pay it off pay it off aggressively you know what's interesting is that most people in debt who i talk to don't actually know how much they owe and that's shocking you would think of course they would no no they don't because who wants to stare at their dead all day yeah and just feel bad about it but you know what you feel much better when you have a plan and the number one question i ask folks uh when they tell me they have debt i say number one do you know how much you owe they never do number two for the rare people who say you know fifteen thousand or seventy thousand whatever i say what is your debt payoff date you can actually plug it in you can pay uh plug in a debt payoff calculator online you can map it all out and you will be able to know the exact month your debt will be paid off based on how much you're spending right now based on how much you're contributing to that debt payoff now you'll be able to see that if you add an extra 50 bucks a month or 100 bucks a month that thing will actually often times shorten by years because of the interest it doesn't matter if it's going to take you three months or four years to pay off your debt it doesn't matter to me what matters is that you know the date okay so that's number two pay off any debt you've got three if you've got money left over uh go to your roth ira and if you can max that out that's a great tax advantaged accountant that's tax deferred is that right yeah yeah okay so um uh that's three that's three okay it's actually post-tax money and then four if you've still got money you're going to go to back to your 401k which is uh another tax advantaged account you're going to max that out if you still got money you're going to create a non-taxable non-retirement account and just put your money in there now there's a few other wrinkles to this there's hsas available there's also your emergency fund that's talked about in the book and all these things there are details but that just shows you when you've got money this is where you go there's a structured way of thinking about it a ladder towards financial success exactly and if you follow the steps it's almost like the like a waterfall it just goes from step one to step two to step three and your money's going where it needs to go automatically and you will feel great you'll feel great which is so important and also you're going to look at your accounts and see debts going down investment and savings are going up and all of a sudden you wake up six months from now you're like oh my god i didn't realize i have that much saved in my savings account that's because of the decision you made today let's say you're you know working a job making decent money but you're not really breaking through and you're struggling to earn more to get out of that 50k a year type of range maybe around there and all your friends are making the same amount all your peers are in the same boat and everyone's stressed about money and you hear someone say well you know you may earn the average of the five people you spend the most time with yeah should they cut all those five friends out of their life because like well you know my peers are holding me back if they're having those negative conversations or how can they start to level up yeah without cutting people out of their life yeah i never encourage anyone to cut off their friends uh and i think that's a common misconception that you have to close all the doors to your friends look i've got friends from high school junior high that i still hang out with and uh i'm not judging them based on their bank account i don't even know how much they make or how much they're worth that's not why i'm friends but the average of the five people you're surrounded with that is a very powerful idea and instead of closing the door on the people you hang out with why not open the door to some new people why not find people who go to your conference for example or who are on my site people who are ambitious who have gone through these programs and say you know what can we set up a weekly check-in it could be five minutes it could be over text but let's set up this check-in and just say what do you want to do last week did you execute why or why not every week 9 a.m monday let's do it that's how you suddenly meet a group of people who are unapologetically ambitious and that will change everything for you because instead of having to drag people to these self-development conferences and they say that's weird i don't want to do it the people you actively seek out are going to be like yeah i'm in let's do it let's do it yeah that's powerful yeah so find the new communities that you can have these conversations with yeah and don't cut everyone out of your life but just start having those conversations with people that are more aggressive yeah like do you know what i told people to do on my instagram account so i told people it's important to find other people who support you a lot of you are waiting around for some like millionaire to fall out from the sky and invite you to their private group it's never going to happen never uh instead why don't you start it yourself and i said go into my comments write who you're looking for and then invite someone to join you like that you don't need to wait no one's coming to rescue you it's not a disney movie nobody's coming it's only you so take control and go find someone and then build that together i like that cody working on the cameras here asks a really good question does my opinion on investing in real estate change if you live in the midwest and i think the answer is yeah it can um the calculus on buying a house in the midwest is different than cities like manhattan san francisco and l.a so again the message here is not don't ever buy a house but it's run the numbers to make sure that you're making the right financial decision because in columbus ohio you can buy a house for 200 grand yeah and a nice one there you go it may be better to do that just to have the peace of mind of your own space or whatever it may be yeah what is my opinion on dave ramsey's concept of the debt snowball so i think dave ramsey is really good for people who are in debt that's not really the folks that i speak to that often but i think he does a great job with them and what he talks about is the debt snowball is encouraging people to pay off their highest balance first right their highest balance so if you have four different credit cards you're paying off the one with the highest balance whereas the mathematically correct answer is to pay off the credit card with the highest interest rate so he's actually taking advantage of a peculiar quirk of human psychology which is that we want to see a win right we want to get a win and it doesn't matter if we're paying a little extra in interest once you get that first credit card paid off you're going to want to do the next one and it's going to snowball i happen to think it's actually really smart and one of the reasons that i think my book has done well is that it factors in human psychology yeah so i'm not telling you in the book uh don't spend money on lattes in fact i want you to spend as much money as you want on latte i'm gonna get one right after this exactly get your credit right negotiate your salary get a good job automate your money you could buy 10 000 lattes it doesn't make any difference at all and so whether it's the debt snowball or whether it's earning more or whether it's automating your money you want to make sure that this advice is something you're actually gonna follow and that means you need to bake in psychology yeah i love it what's your definition of greatness and my definition of greatness is deciding what kind of life i want to lead and then creating it unapologetically even if it means making different choices than other people hmm that's good that's good what's yours greatness is discovering the unique gifts and talents within you pursuing your dreams and using those gifts and making an impact on the maximum number of people in that pursuit love it wow that's mine powerful if you could only share three lessons with the world you've got all these books and programs and courses on so many different things but if you had to take all that with you and no one had access to it anymore you can only write down three lessons or principles or truths and this is all the world would have of your information left in physical form what would be your three truths man you're putting me on the spot here i know i like prep no okay i like it three principles are truce for the world on anything life anything wow uh okay my first one would be uh you can create a rich life through planning and unconventional choices uh my next one would be that you've got something to say and the world needs to hear it and the third one would be you could probably eat spicier food than you think i guarantee that if you want to learn how to make more money and master money in your life then check out this video right here that's when i've made the biggest mistakes in my life is when i was desperate and the few times that i was greedy where i thought oh i'm going to slip in there and that's going to be easy money what was that easy money could you share a story of one of those greedy times where you tried to jump in and yeah

Channel: Lewis Howes

Views: 80,997

Keywords: ramit sethi, ramit sethi interview, ramit sethi i will teach you to be rich, lewis howes, lewis howes interview, school of greatness, ramit sethi impact theory, self help, self improvement, self development, personal development, motivation, inspiration, money, wealth, investing, how to make money, personal finance, finance 101, millionaire, how to be rich, money habits, success habits, motivational video, inspirational video, how to become rich, money advice, cash flow, cash

Id: mZF8tDFX0gc

Length: 48min 33sec (2913 seconds)

Published: Sun Sep 20 2020